FOREX PRO Weekly, February 21-25, 2011

[Ahmed El-Shazly]

Hi Ahmed
Yes, this is Butterfly. What moment would you like to discuss?

Is it a safe to enter short now (taking into consideration the trend and its near it high)?
Also, what is the best place to put my stop if I want to short the market?

 

[dkami]

Thanks Sive for the heads up on the AUDUSD this week i don't really like trading the EURUSD as i don't really know which country is in worse shape the EURO ZONE or the US their both deep in the **** in my book so thanks again for sharing your analysis on the AUDUSD it gives me more confidence for eg. i just went short on the AUDUSD for a skalp@ 1.01219 and i was just about to take a small hit thinking man I'm on the wrong side then i got your email so thanks i will hold as i now have a SL and TP not that i didn't before but like i said before your analysis gives my more confidence when I'm in a trademany thanks

 

[Sive Morten]

Is it a safe to enter short now (taking into consideration the trend and its near it high)?
Also, what is the best place to put my stop if I want to short the market?

I depends from the context of trading.
Tell, me what things paticularly force you to enter short.
For expample, if you trade purely butterfly then, your stop should be placed so, that if butterfly will fail - your position close. Etc...
Write here your explanation - what particular signals you intend to follow and then it will be easier where to place stop.
Also you should point on what time frame you're trading. And what your max stop value in pips...

 

[Ahmed El-Shazly]

I depends from the context of trading.
Tell, me what things paticularly force you to enter short.
For expample, if you trade purely butterfly then, your stop should be placed so, that if butterfly will fail - your position close. Etc...
Write here your explanation - what particular signals you intend to follow and then it will be easier where to place stop.
Also you should point on what time frame you're trading. And what your max stop value in pips...

My entry criteria are: butterfly with a lot of resistance levels as shown in the diagram.
It is based on 4 hours chart. However, max stop level does not really matter for me cause I use money money managment where I have my risk in dollar amount fixed regardless of the stop (change the position lot according to that)

 

[Sive Morten]

My entry criteria are: butterfly with a lot of resistance levels as shown in the diagram.
It is based on 4 hours chart. However, max stop level does not really matter for me cause I use money money managment where I have my risk in dollar amount fixed regardless of the stop (change the position lot according to that)

Ok,
I suppose that the propriate way to trade it will be Enter Short at 1.27Butterfly "Sell" completion point (this is also an AB-CD complition). with stops just above the highs(Somewhere around 1.3835-40).
Target - one of retracement levels from the whole butterfly upmove.
If market will fail and continue move up - get out at s/l and watch for second possible enter on Butterfly at 1.618 target.

 

[MidnightRun]

Hello,
Guys, I understand that you are missing our EUR/USD discussion, so I promise, that the next week we will dedicate to EUR.
But today's is Friday, besides, AUD gives us two intraday patterns to trade. So, I think that today we will still talk about it.
But next week, as I promise - EUR...

So,
On daily AUD we see that Butterfly with 1.27 target at 1.0222 is still forming. Also market has almost totally erased the previous hard sell-off. This is a bullish sign. Trend is ready to turn bullish, but our confirmed trend is still bearish. Anyway, I think that we should focus on intraday trades and do not hold any position for too long.

On 4 hour chart you can see that market has reached 1.618 exp target near monthly pivot resistance and 1.27 exp. target from another more resent ABC swing. The thrust, that market shows is not very impressive, but still it could be a context for 4-hour B&B "Buy" trade. I expect that market can bounce from 1.0052 area - first 3/8 Fib support. The target, as always - 5/8 Fib resistance from whole retracement move. Also you can use this enter to possess yourself a bit longer - just keep your risk reasonable, and move s/l to b/e as soon market will allow to do that.

On hourly chart you can see, that market has accomplished 3-Drive sell pattern. the minimum target of this pattern is a low between 3d and 2d drives. -This is precise the level where we intend to enter long with 4-hour B&B trade.
Does it confuse you too much?

So , how it could be traded:
1. Enter short with horly 3 drive Sell, when hourly MACD will confirm bear trend. Stop could be placed above the highs, whatever it will be there. If market will accelerate to the upside - do not enter Short. Target - 1.0045-1.0052 area.
2. Then and if 3-drive sell target will be accomplished - drop your time frame to 30-min or even 15- min and watch for Buy signal around 3/8 major Fib support on 4-hour chart. If you see some buy patterns - you can enter Long with B&B trade.

Sive,
Thank you for your analysis. Just double-checking:
Charts are 1D, 4H and 1H, futures, not spot forex. Right?
Thank you.

 

[Sive Morten]

Sive,
Thank you for your analysis. Just double-checking:
Charts are 1D, 4H and 1H, futures, not spot forex. Right?
Thank you.

Hi MidnightRun
Yes, that's right.